NasdaqOMX invests in TOM – not TOMS

Yesterday NasdaqOMX announced it was buying a 25% stake in The Order Machine (TOM), which has nothing to do with what most of you could think of: Bloomberg’s TOMS (Trade Order Management Solutions). Let me explain what TOM is. TOM Holding N.V. was founded in 2009 by BinckBank (independent online bank for investors listed on NYSE Euronext Amsterdam) and Optiver (a leading active proprietary trading firm in Europe) as a joint venture. In 2010 ABN AMRO Clearing Bank joined BinckBank and Optiver and became the third shareholder of TOM Holding. The fourth stakeholder was IMC financial markets (IMC – a leading proprietary trading and asset management firm in Europe) in 2012. TOM has been developed in the MiFID regulatory framework to provide a best execution service for retail investors. TOM has two main products: TOM Smart Execution which in essence is a Smart Order Router (SOR) that routes a bank or broker’s client orders to the best execution venue for its equities or equity derivatives orders, between Euronext, the TOM MTF and potentially other venues such as BATS Chi-X Europe. The other product is actually the TOM MTF (regulated trading venue under supervision of the Netherlands Authority for the Financial Markets), which facilitates open order-book trading in both cash equities and derivatives. It currently offers trading in Dutch, Belgian and French shares, and their derivative products. There is also trading in a  selection of ETFs.  Orders are matched in the TOM order-book based on price-time priority and is powered by NasdaqOMX technology for both equities and equity derivatives. TOM has roughly 15 per cent market share of the Dutch Equity Derivatives Market, Europe’s second-largest options market. In 2011 the SOR has processed 2,5 million of transactions with a turnover of EUR 21,8 billion. The MTF has matched 500 000 transactions representing EUR 3,5 billion turnover. A small but however interesting development for NasdaqOMX as it tries to make inroads into the European Derivatives Market. To be continued…
About Joséphine de Chazournes

Joséphine de Chazournes is a senior analyst with Celent’s Securities & Investments practice. Her research focuses on capital markets innovation and emerging technologies, especially artificial intelligence. She covers the legacy and ecosystem transformation theme across capital markets, including across asset classes, cash and derivatives, listed and OTC, and from pre- to post-trade. Joséphine is a frequent speaker on strategy, regulation, fintech and the impact of technology on market infrastructure. Prior to joining Celent, Joséphine worked with the London Stock Exchange, Borsa Italiana and Goldman Sachs International.

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